Over the past few years, women have emerged as active and deliberate investors, reshaping the mutual fund industry’s dynamics. This shift is not just a trend but a significant societal evolution. Association of Mutual Funds in India (AMFI) data for 2022-2023 reveals a groundbreaking influx of 27.50 lakh women investors into the mutual fund arena over the last three years. This rapidly increasing involvement of women in finance symbolises their growing economic stature.
Women today are not just managing household budgets but are actively shaping their financial futures. In this evolving landscape, mutual funds emerge as a robust tool, tailor-made for the discerning woman investor seeking both growth and stability. The fast-evolving mutual fund landscape in India offers multiple wealth creation opportunities for women across several instruments with the intention of capital appreciation and earning reasonable returns in the long run. They can invest on the basis of their needs, end objectives, ability to bear risks, investment corpus etc. and even alter their plans as and when the requirement changes.
For women, financial empowerment is not just about wealth creation; it’s about achieving financial security and independence. As women continue to break barriers and take charge of their financial destinies, mutual funds have the potential to be a strategic avenue for wealth creation. Whether you’re a young professional or planning for retirement, one must consider these funds as part of their investment journey. Remember, financial independence is not just a goal; it’s a powerful tool for empowerment!
In this endeavour, SIP (Systematic Investment Plans) can prove to be an interesting element for investors. One can make periodic payments of a predetermined sum in a scheme of their choosing. This will help inculcate a sense of discipline and one can also stand to benefit from the power of compounding. Furthermore, one can invest with a sum as small as Rs 100 or Rs 500 per month, making it suitable for all investment corpuses. Investors can also consider Step-up SIP which allows women to adapt their investments according to their financial capabilities, ensuring that they keep pace with the earning potential.
Let us look at some of the avenues that women can consider:
At its core, hybrid funds are a blend of equity and debt instruments, ingeniously crafted to offer the best of both worlds: the growth potential of stocks and the stability of bonds. Hybrid mutual funds offer a gamut of options to investors basis their equity/debt exposure. Since these funds offer diversification as an inherent component of the scheme, investors are free from the hassle of putting money into multiple funds, proactively tracking them and then adjusting allocation in response to mark to market changes and incremental flows.
Hybrid funds can play a pivotal role here, providing a gateway to making informed investment decisions. They can be leveraged at different stages of one’s financial journey. For the young professional, starting early with hybrid funds can help build a substantial corpus over time, leveraging the power of compounding. For the family planner, women balancing home and career can find solace in the relative stability of hybrid funds, ensuring their family’s financial needs are met without high exposure to risk. And as retirement approaches, the focus shifts to preserving wealth and stability, which can be achieved by focusing on hybrid funds that have higher exposure to debt.
Passive funds can be a good avenue for investors who are inherently looking for market-linked returns, minimum tracking error, diversification, and transparency in portfolio composition. Passive investing strategies have proven to be ideal for those investors who wish to leverage the benefits of the domestic markets while wanting to maintain downside protection to their portfolios. Women can consider gaining exposure to a whole range of Index Funds, exchange-traded fund (ETFs), or even fund of funds (FoFs) to create a diversified, transparent, and low-cost portfolio.
Most investors tend to get scared or have multiple misconceptions about debt funds. However, these instruments can turn out to be some of the most viable options to park surplus money and meet income needs. For those who wish to add an additional layer of stability to their portfolio, Fixed Income strategies should not be overlooked. In the current macro environment, fixed Income strategies have the potential to be an attractive entry point for several investors.
Equity mutual funds too offer several compelling reasons for women investors. It is essentially an opportunity to participate in the growth potential of the market while aiming to manage risk effectively. Today, women have the option to choose across market caps depending on risk appetite, financial goals, and investment horizon. Ultimately, the aim is to adopt a disciplined approach and stay focused on the long-term objectives and not fall prey to emotional or other biases.
(The writer is CBO, Axis AMC)
(Published 10 March 2024, 21:34 IST)
